Transcript Economic Policymaking - Brookville Local Schools

THE AGENDA-SETTING PROCESS
WHAT’S ON THE AGENDA IS…
MOST IMPORTANT
ALWAYS CHANGING
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
WHAT DETERMINES THE
AGENDA?
SHARED POLITICAL
VALUES
TRADITION AND CUSTOMS
SPECIFIC EVENTS
ELITE OPINION
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
SCOPE OF GOVERNMENT
INVOLVEMENT IS INCREASING
REASONS WHY...
PUBLIC DEMANDS
SPECIFIC GROUPS
GENERAL OPINION
CHANGE IN VALUES
CHANGE IN PRIORITIES
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
SCOPE OF GOVERNMENT
INVOLVEMENT IS INCREASING
(MORE REASONS WHY)
INSTITUTIONAL DEMANDS
COURTS
BUREAUCRACY
LEGISLATIVE BRANCH
ESPECIALLY THE SENATE
MEDIA PUBLICIZES…
NEW IDEAS
NEW EVENTS
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
15-2
THEME B - MAKING A DECISION
NATURE OF ISSUE
GROUPS AFFECTED
INTENSITY CONFLICT
POTENTIAL COSTS / BENEFITS
HOW MUCH?
TO WHO?
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
MAJORITARIAN POLITICS
COSTS TO LARGE # OF PEOPLE
BENEFITS TO LARGE # OF
PEOPLE
AFFECTS ON BLOCS OF VOTERS
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
SOCIAL SECURITY IS A MAJORITARIAN POLICY
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
INTEREST GROUP POLITICS
CONCENTRATED COSTS
CONCENTRATED BENEFITS
EFFECTS VERY FEW PEOPLE
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
CLIENT POLITICS
LARGE BENEFITS TO A
FEW
LOW COSTS TO MANY
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
ENTREPRENEURIAL POLITICS
BENEFITS TO MANY
COSTS TO ONLY A FEW
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
PUBLIC POLICY POLITICS
MAJORITARIAN
CLIENT
ENTREPRENEURIAL
INTEREST
GROUP
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
15-3
THEME C = BUSINESS REGULATION
DIFFERENT VIEWS ON WEALTH AND POWER
WEALTH IS GOOD, IT’S AN INCENTIVE,
REWARD
WEALTH CAN BE BAD, B/C IT GIVES POWER
1 - WEALTH = POWER
2 - POWER THREATENS MARKET ECONOMY
POWER THREATENS DEMOCRACY
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
LAISSEZ FAIRE
NO GOV’T INVOLVEMENT
DOMINATED EARLY
IN U.S. HISTORY
(1776-1890’S) or
(1776-1929, 1932 [Grt
Dep])
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
BUSINESS-CUSTOMER REGULATION
PEOPLE WANTED GOV’T
REGULATION
(RAILROADS, “BIG BUSINESS)
SHERMAN ANTI-TRUST ACT
(1890)
“PROGRESSIVE ERA”
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
LABOR-MANAGEMENT REGULATION
LEGAL RIGHT TO UNIONIZE
& COLLECTIVE
BARGAINING
LEGAL RIGHT TO STRIKE
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
LICENSING
(ATTORNEYS, TEACHERS, BARBERS)
LIMITS PROFESSION
MAINTAINS STANDARDS
HIGHER WAGES
( QUALITY & COSTS)
Client Politics
USUALLY SUPPORTED BY THE PUBLIC
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Educator Details:
Name:
BROWN,
MARK
District Last Brookville Local School
Employed: District
Building: Brookville High School
Credentials
Type
Class
Teaching Area(s)
High School (7-12)
Standard
Comprehensive Social Studies
4 Year Certificate $48.00
8 Year Certificate 96.00
Permanent Certificate 120.00
1 Year Temporary 12.00
Pupil Activity Supervisor Validation 21.00
Alternative Educator License 24.00
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
PRODUCTION LIMITS
(MILK, SUGAR, SHIPPING)
KEEPS PRICES HIGHER
LESS COMPETITION
KEEPS SUPPLY LOWER
PUBLIC USUALLY UNAWARE
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
PAC Contributions
from Sugar-Related Interests
(1/1/89-11/28/04)
Beet
$5,174,101
Cane
$3,005,738
Corn
Sweeteners
$1,990,639
U.S. FARM POLICY – PRICE SUPPRTS FOR SUGAR PRODUCERS.
U.S. FARM POLICY – HIGH TARIFFS ON IMPORTED SUGAR.
U.S.SUGAR PRICES ABOUT 20% HIGHER THAN WORLD PRICE.
27 COMPANIES PRODUCE 57% OF ALL U.S. SUGAR.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
GOVERNMENT SUBSIDIES
(COTTON, RICE, TOBACCO)
PROMOTION OF AN
INDUSTRY
NOW LIMITED TO EXPORTS
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Tobacco Subsidies by year, U.S. Total
Year
Tobacco
Subsidies
1995
$0
1996
$0
1997
$0
1998
$0
1999
$0
2000
$345,123,312
2001
$129,247,286
2002
$4,990,960
2003
$51,121,183
2004
$5,281
2005
$0
2006
$0
Total
$530,488,022
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Edwards, Wattenberg, and Lineberry
Government in America: People, Politics, and Policy
Fourteenth Edition
Chapter 17
Economic Policymaking
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
MAJOR TYPES OF WORLD ECONOMIES
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
POLITICS AND ECONOMICS
PEOPLE HOLD THE PRESIDENT ACCOUTABLE FOR THE
ECONOMY...
BUT THE PRESIDENT CAN’T CONTROL THE ECONOMY.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
“Pocketbook Issues”
aka
“People vote with their wallets”
Personal economics(most studies say this #1)
or
National economics (Wilson says that is #1)
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Roots of Economic Involvement
 Regulation was limited in the nineteenth
century.
 Prevailing attitude was laissez-faire.
 As business cycles changed, need for
intervention grew.
 Growth in tariffs.
 Railroads required interstate regulation.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
 Sherman
Anti-Trust Act of 1890.
Progressive Era
 Increased regulation of railroads, business, and
banking.
 Growth in regulation of food industry.
 Creation of the Federal Reserve System.
 Establishment of Federal Trade Commission.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Depression and the New Deal
 Laissez-faire state becomes interventionist.
 Creation of Federal Deposit Insurance Corporation.
 Founding of Securities and Exchange Commission.
 Passing Agricultural Adjustment Acts.
 Ratification of new labor and industrial regulations.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Social Regulation Era
 Economic regulation controls business and
industry.
 Social regulation sets quality and safety standards.
 Social regulation emerges in 1960s and 1970s.
 Agencies like EPA, OSHA, NTSA.
 Brings new businesses into governmental
regulation.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Government, Politics, and
the Economy
Introduction
Capitalism:
An economic system in which individuals and corporations,
not the government, own the principal means of
productions and seek profits
Mixed Economy:
An economic system in which the government is deeply
involved in economic decisions through its role as
regulator, consumer, subsidizer, taxer, employer and
borrower
Multinational Corporations:
Businesses with vast holdings in many countries
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Government, Politics, and the Economy
Economic Policy at Work: An Illustration
Government Regulation and Business Practices
Securities and Exchange Commission regulates stock
fraud
Minimum wage: the legal minimum hourly wage for
large employers
Labor union: an organization of workers intended to
engage in collective bargaining
Collective bargaining: negotiations between labor unions
and management to determine pay and working
conditions
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Government, Politics, and the Economy
Wal-Mart and the World Economy
Wal-Mart (the largest company in the world)
epitomizes America’s imbedding in the world
economy.
The proportion of U.S. GDP accounted for by
international trade is 30 percent.
Wal-Mart takes full advantage of “comparative
advantage.”
Offshore outsourcing is a key concern of the new
global economy.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Government, Politics, and the Economy
“It’s the Economy, Stupid”:
Voters, Politicians, and Economic Policy
Economic trends affect who voters vote for.
Economic conditions are the best predictor of
voters’ evaluation of the president.
Republicans worry about inflation.
Democrats stress importance of unemployment.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Government, Politics, and the Economy
Two Major Worries: Unemployment & Inflation
Unemployment Rate: measured by the Bureau of
Labor Statistics (BLS), the proportion of the
labor force actively seeking work, but unable to
find jobs
Inflation: the rise in prices for consumer goods
Consumer Price Index: the key measure of
inflation that relates the rise in prices over
time.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Government, Politics, and the Economy
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Dec 2011
http://www.policymap.com/Landing
Pages/unemployment.html?gclid=C
NXdh_yuia4CFQsBQAodrFgH7A
http://data.bls.gov/cgibin/surveymost
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
THE FEDERAL RESERVE SYSTEM
(THE FED)
DETERMINES…
–MONEY SUPPLY
–INTEREST RATES
–RESERVE RATE FOR BANKS
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Policies for Controlling the Economy
Monetary Policy and “the Fed”
Monetary Policy: the manipulation of the supply of
money in private hands–too much cash and credit
produces inflation
Money supply affects the rate of interest paid.
Main policymaker is the Board of Governors of the
Federal Reserve System – the “Fed”.
Created in 1913 to regulate lending practices of
banks and thus they money supply.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Figure 18.1- Federal Reserve System

Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Back
Policies for Controlling the Economy
Fiscal Policy of Presidents and Parties
Fiscal Policy: the policy that describes the
impact of the federal budget on the
economy.
Keynesian Economic Theory: government
spending and deficits help the economy
weather its normal ups and downs.
Government’s job is to increase demand of
goods.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Policies for Controlling the Economy
Fiscal Policy of Presidents and Parties
Supply-Side Economics: the policy that says
there is too much taxation and not enough
money to purchase goods and services.
Reduce taxation and government regulation
then people will work harder, and thus
create a greater supply of goods
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Why It Is Hard to Control the Economy
Some think politicians manipulate the
economy to win reelection.
Problems with that theory:
1-Things like the budget are prepared in
advance of when they go into effect
2-Government makes economic policy slowly
3-Some benefits are indexed
4-Capitalism can also affect the economy
5-Federal government spends 20-25 percent of
GDP
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Figure 18.3- Federal Revenues

Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Back
Figure 18.4- Discretionary Spending

Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Back
Politics and the International Economy
Protectionism
The economic policy of shielding an
economy from imports. Use of tariffs
common.
World Trade Organization (WTO)
The international organization that
regulates international trade.
Free trade is controversial
Jobs have increasingly been outsourced.
But short-term pain equals long-term gain.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Arenas of Economic Policymaking
Business and Public Policy
Corporate Corruption and Concentration
Increased incidence of bankruptcy and scandals
Increased number of corporate mergers
Antitrust policy: a policy designed to ensure
competition and prevent monopoly, which is the
control of a market by one company
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Arenas of Economic Policymaking
Regulating and Benefiting Business
New wave of regulation
2002 tougher penalties for stock fraud
Creation of Accounting Oversight Board
Regulate accounting industry
Businesses benefit from regulation, too
Copyrights, inventions, and patents.
Government may loan businesses money.
Government collects data that business
use.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Arenas of Economic Policymaking
Consumer Policy - Consumer Lobbying
Consumers had little gov’t protection.
Food and Drug Administration (FDA):
Created in 1913; approves foods and drugs
sold in the U.S.
Federal Trade Commission (FTC):
Responsible for regulating false and
misleading trade practices.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Arenas of Economic Policymaking
Labor and Government
Government historically sided with business.
National Labor Relations Board (NLRB):
Created in 1935 by the Wagner Act
Regulates labor-management relations
The Taft-Hartley Act (1947)
The right of collective bargaining
Prohibited various unfair practices by unions.
Government now provides unemployment insurance
and a minimum wage.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Figure 18.2- Minimum Wage Growth

Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Back
Understanding Economic Policymaking
Democracy and Economic Policymaking
Voters expect what politicians can’t control
Eg: Stop outsourcing, control oil/gas prices
Sometimes economic theory and democratic theory
may be at cross purposes.
It is politically difficult to make decisions that hurt
groups or involve short-term pain for long-term
gain.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Understanding Economic Policymaking
Economic Policymaking & the Scope of
Government
Liberals (generally Dems) tend to favor more
government involvement in the economy.
Conservatives (generally Reps) favor less
government involvement in the economy.
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.
Summary
Political and economic sectors are
closely intermingled.
Voters expect a lot from politicians,
more than they can deliver on the
economy.
Two major instruments available to
government for managing the
economy— monetary and fiscal
policies
Copyright © 2009 Pearson Education, Inc. Publishing as Longman.